The latest research by the InvestorsObserver research team has revealed that despite steady rises in dollar salaries, the average American’s purchasing power, when measured in ounces of gold, has plummeted by 77% since 1998. Isn’t this striking?
Gold-adjusted income acts as a barometer for real purchasing power reduction, and this affects everything from housing to education to retirement planning.
By 2012, even the most prosperous states had wage levels equal to poverty thresholds from just 15 years earlier, revealing the erosion of real wealth, and a plummet to what used to be perceived as poverty level.
Interested in the full research report? Read it here.
I had a chance to learn more in an interview with Sam Bourgi, North America-based researcher and financial analyst.
Why is gold a good standard to measure against?
Gold is considered a reliable standard to measure purchasing power because it has maintained its value across centuries. It’s been serving as a hedge against inflation and currency devaluation. Unlike fiat currencies, which can be printed in unlimited quantities and are subject to governmental policies, gold offers long-term stability and universal recognition as a store of value. Comparing wages to gold helps reveal shifts in real wealth that may be obscured by changes in nominal dollar amounts.
Why is there such a discrepancy, if wages are rising?
The discrepancy exists because, although wages have increased in nominal terms, inflation and the declining value of the dollar have outpaced those gains, especially when measured against hard assets like gold. Central bank policies, increased money supply, cost-of-living increases, and asset price inflation all contribute to this gap, meaning workers may feel wealthier on paper but can actually afford less in terms of stable value goods or investments. Gold’s surge in price shows how much more labor is required to purchase the same amount of gold compared to previous decades.
How can people work to protect wealth with less purchasing power?
To protect wealth as purchasing power erodes, individuals can diversify their savings and investments to include real assets that historically hold value during periods of inflation, such as gold, real estate, or inflation-indexed securities. It’s important to regularly reassess portfolios, consider precious metals, and seek assets with returns that outpace inflation as practical strategies for maintaining true buying power. Education about the difference between nominal income and real wealth is key to making informed decisions in today’s economy.
ABOUT SAM BOURGI
Sam Bourgi is a finance analyst and researcher at InvestorsObserver, bringing over 13 years of expertise in financial markets, economics, and monetary policy. His professional background spans the private, nonprofit, and public sectors, where he has held positions such as senior policy adviser, labor market analyst, and marketing director. Sam’s in-depth research and market analysis have been referenced by leading institutions and organizations, including the U.S. Congress, Department of Justice, Chicago Board Options Exchange, Bank for International Settlements, Boston University Law Review, Barron’s, and Forbes. Sam regularly appears on TV, including CBN, KFYR TV, and ABC30, and is often quoted by such media outlets as the SF Chronicle and MSN.
ABOUT INVESTORS OBSERVER
Investors Observer is a trusted source of independent financial analysis, market insights, and investment research for individuals and institutions. Founded to empower retail investors with actionable intelligence, InvestorsObserver delivers timely commentary, data-driven studies, and accessible financial tools designed to simplify complex market trends. Its research and insights have been featured by various media outlets, including Yahoo, The Guardian, Morning Star, Nasdaq, and more.
Previous research by InvestorsObserver:
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The American middle class is locked out: nearly a third of major cities now unaffordable for homebuyers
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